Open banking has been one of the most widely adopted fintech innovations in recent times, paving the way for improved lending and borrowing experiences. As of March 2025, open banking users have crossed 13 million, a visible sign of its growing popularity among young consumers.
It’s also a step towards responsible lending, as there’s greater awareness around affordability assessments and consumer trust due to improved transparency in lending processes. Open banking has shifted consumer expectations, as it has simplified loan review processes, allowing lenders to offer inclusive credit options with greater speed and accuracy.
As a result, there is now a growing demand for fast loan products by borrowers. This is especially true in the case of young workers, where the baseline expectation is for instant loan approvals, supported by 24/7 availability of credit.
Thankfully, with credit products like quick loans by Salad, ethical lenders are rising to the occasion by using open banking systems effectively to meet these demands.
We explore below how open banking is impacting quick loan providers.
1. Improved Regulatory Compliance
Before open banking stepped into the financial services industry as a fintech innovation, borrowing credit came with more caution and the need for due diligence. This was primarily because, in a changing economy, driven by global factors and inflation, credit was more exclusive and costly.
There were also fewer regulatory protections for consumers, which resulted in vulnerable borrowers being trapped by predatory lending practices and high-cost credit. This prompted the FCA to push for responsible lending practices, which included more thorough affordability checks.
Open banking systems were aimed at helping lenders, especially quick loan providers, to offer credit while keeping the financial health of borrowers in mind. By bringing affordability checks under regulatory purview, lenders are mandated by law to only offer credit products that a borrower can afford without compromising their financial security.
2. Smarter and Faster Loan Assessments
Lenders have worked with static data for far too long and appreciate the access to real-time data that open banking systems afford them. While credit scores and other traditional data checks were important reference points, they were often outdated and erroneous, leading to inaccurate assessments.
For lenders, this meant spending extra time manually double-checking and verifying various data entries. This led to delays in loan application reviews, slowing the approval process considerably. Even if a lender advertised fast loans, the process would still take a few days.
In matters of emergency, this was considered a serious barrier to receiving timely credit. However, with open banking, lenders are now able to make these lengthy assessments in a matter of minutes, speeding up the loan review and approval process. For quick loan providers, this has been a boon, helping them to provide faster credit.
3. Enhanced Consumer Experience
Borrowers can look forward to greater transparency and improved borrowing experiences with open banking. This is one of the main reasons why open banking saw a quick and widespread adoption. Reduced wait times on loan approvals have made borrowing easier.
The added convenience of minimal paperwork with full transparency on lending processes has garnered greater consumer confidence and trust. Open banking has also allowed lenders to use key financial information to customise their credit products and services.
This has helped the cause of financial inclusion considerably, as borrowers who have been denied loans based on poor credit scores can now access better credit options. Additionally, with new smart saving apps using open banking data, borrowers can track their expenses and automate their savings.
4. Levelling Market Competition
Small lenders or direct online lenders were left at a competitive disadvantage when compared to big banks and traditional financial institutions. This was because, before open banking, only banks had access to an individual’s financial data, giving them a more granular yet holistic view.
They used this data to offer attractive and exclusive credit tailored to those with good credit standing. Without access to such data, small businesses and lenders had to rely on more time-consuming loan application processes to limit their lending risks. This made their credit options more costly and unappealing to borrowers.
With open banking data, direct online lenders can offer competitively priced credit options based on real-time financial data, offering borrowers a credible alternative to traditional lending institutions. This is especially relevant for borrowers who have a thin credit file, bad credit or struggle to find suitable loan options from traditional lenders.
5. The Strategic Outlook for Quick Loan Providers
Open banking has been a game-changer for fintech with positive implications for lenders, especially quick loan providers. Previously, quick loan providers took 3-5 days to process loan applications, but open banking data has reduced that to a few hours.
This has paved the way for credible and hassle-free instant loans, which are meeting the borrowing demands of young consumers, especially gig workers and independent professionals.
Quick loan providers using open banking data have a competitive advantage over traditional lenders as they can offer tailored APRs based on real-time financial data. Combined with improved transparency in the lending process, backed by FCA authorised frameworks, open banking is building consumer trust on a solid foundation.
Conclusion
Open banking is expected to make loans quicker, transparent and more inclusive as lenders tap into new market demographics, fueled by borrowing demands. For quick loan lenders, assessing risks and loan affordability has become a breeze, giving them an edge in the lending market.
With instant loans and 24/7 credit availability, direct and ethical lenders like Salad are paving the way for improved borrowing experiences with more inclusive credit offerings.
